The Critical Role of Income Redistribution for Poverty Reduction: Alternative Scenarios

Global progress towards SDG 1 had already slowed prior to the COVID-19 pandemic and the world was not on track to achieve this goal by 2030. The prospect of achieving SDG 1 by 2030 has been further dimmed by the impact of COVID-19. The global extreme poverty rate (SDG target 1.1) is projected in a baseline scenario to decline to only 9.2 per cent by 2030. This would mean that as many as 785 million people could find themselves in extreme poverty by 2030, far from reaching SDG 1. Given this context, achieving SDG 1 by 2030, will require extraordinary efforts by countries, both individually and collectively. The scenario analysis presented in this policy brief shows that a decline in income inequality can be a potent driver of poverty reduction and if combined with robust economic growth, can produce highly positive, if not miraculous, results for the eradication of extreme poverty, by 2030.